Brightoil warns of loss, breaches covenants
Brightoil Petroleum has warned that it expects to post a loss in H1FY13 results mainly due to the depressed market conditions in the shipping industry and decreasing bunker margins, Seatrade Asia online reports.
The group’s International Trading and Bunkering business has experienced a lower profit margin and suffered an adjusted gross loss (i.e. gross profit/loss plus fair value change of derivative financial instruments) as a result.
Brightoil further warned that it has breached its interest coverage ratio covenant with a lender. "Failure to perform or comply with any of these financial covenants entitles the Lenders thereunder to declare the outstanding principal amount, accrued interest and all
other sums payable under the relevant Facility immediately due and payable and/or terminate the Facility," Brightoil warned. This in turn may trigger cross default provisions in other loans.
Brightoil added that it is "in the process of applying for relevant waivers from the lenders. In the meantime, the group is in the process of seeking to determine what proportion of its long-term portion of vessel financing may need to be reclassified from non-current liabilities to current liabilities in the 2013 interim result".
